Short dive:
- A federal judge in Texas last week struck down the U.S. Department of Labor’s recently expanded nationwide overtime rule, depriving about 1 million workers of overtime eligibility, according to a court filing.
- U.S. District Court Judge Sean Jordan ruled that “the 2024 rule exceeds the Department’s authority and is unlawful.” The ruling strikes down the DOL’s overtime rule that changed the threshold at which workers are entitled to overtime from $35,568 to $43,888 as of July 1 and would have increased it to $58,656 on Jan. 1, 2025, according to attorneys for Littler.
- Jordan had previously granted a preliminary injunction to the Texas state government just days before the rule took effect.
Diving information:
The Fair Labor Standards Act requires employers to pay overtime to employees who work more than 40 hours in a week, but exempts some executive, administrative, and professional (EAP) workers. To be exempt, workers must be salaried, their work must match the EAP’s duties and they must earn a minimum wage, Littler’s lawyers said.
Jordan ruled that by setting the salary threshold so high, the DOL created a “de facto ‘salary only’ test for the EAP exemption,” which exceeded the department’s authority, Littler’s lawyers said.
The ruling also vacated what Littler’s lawyers called the automatic “escalator” provision, which would have increased the salary threshold every three years.
Despite the ruling, Littler’s attorneys warned employers to check with counsel before reversing changes made in response to the July 1 salary threshold increase and noted that some states, including California, New York and Washington, have salary thresholds that exceed the FLSA threshold.
Junior lawyers Maury Baskin, Jim Paretti and Rob Friedman represented a coalition of businesses and trade associations challenging the overtime rule.